A focus on finance leadership

Foreword by Helen Brand

Financial leaders today face a major challenge in ensuring the function adapts to the changing
needs of the business. With growing stakeholder interest in the broader performance of
organisations beyond pure financial measures, there is a growing focus on the need to drive
improved business performance which can be sustained for the longer term. Finance leaders
have a significant role to play in leveraging the capabilities of the finance function to provide
insight and commercial support to drive sustainable decision making and bring a broader external
market focus to support the strategy of the business, but critically this must be counter balanced
by continuing to ensure their traditional fiduciary and controllership responsibilities are met. This
need for balanced finance leadership is the hallmark of today’s CFO role.

From transforming finance operations, driving effective risk management strategies, and providing
analytical insight to support commercial decision making, today’s finance leader faces multiple
priorities. This report brings together the conclusions and discussions from ACCA’s regional CFO
summit held in Hong Kong in October 2012 as well as a number of high level CFO roundtables
recently held in the region and other parts of the world. These events have provided a unique
platform for business and finance leaders from across the region to share their insights and
perspectives on the key issues facing finance leaders today. I am delighted to be able to share
with you some of the conclusions.

Helen Brand OBE

Chief Executive
ACCA

Foreword by May Law

The finance function is proving invaluable to doing good business in today’s highly globalised
and shifting world economy. Change has come in the rapid growth of developing markets in
Asia, particularly China and India, even as Europe and the US struggle to get back on their feet.
As an international financial centre and a gateway to China, Hong Kong undoubtedly plays an
influential role in the Asian evolution story and as such was an ideal venue for the ACCA’s first
CFO summit in the region. Part of a global series of events at which finance leaders share insights
on their profession, ACCA CFO Summit Asia 2012 provided a forum for the thought leadership
in the finance sector that is spurring innovation in the business world. The Hong Kong summit
brought together finance professionals, accountants, governance advocates and businesspeople to
discuss not only the financial transformation that is taking place today, but also how to manage
it. At the CFO Summit, participants worked at finding the best ways to harness change for a
positive outcome—a sustainable future.

May Law
Director - Asia Pacific
ACCA

A focus on finance leadership 3

The need for balanced finance leadership
The nature of the transformation of the
CFO role and the value that finance
leaders can bring to an organisation were
among the insights garnered from the
Chief Executive Officers (CEOs), CFOs
and board directors who participated
over the year in a series of ACCA
roundtables in China, the US, Russia
and Switzerland. These insights were
initially presented in a recent report
issued by ACCA and the Institute of
Management Accountants (IMA), but
further reflections have also been gained
in CFO roundtables recently held in
Singapore and China.
One of the areas of interest in the
role of the CFO has been the evolving
relationship with the CEO. The
broad conclusion was that today’s
effective CFOs provide significant
support to the CEO, executive board
and wider management team, and
naturally brings a high level of financial
understanding and acumen as a lens to
difficult business decisions. A focus on
articulating and sharpening the corporate
strategy, and clearly understanding the
company’s vision through providing
effective business insights based on
strong financial understanding were
identified as imperatives, but so too was
ensuring strong financial controllership
and effective risk management of the
organisation. This attributes call into play
a need for CFOs to bring to the table a
need for balanced finance and business
capabilities and skills. There was also a
clear need articulated from CEOs and the
board for CFOs to bring a much wider
business perspective to the role.
One of the interesting discussions
from the roundtable events focused
on the extent to which the CFO was a
natural successor to the CEO. There are
merits to the argument, particularly as
the CFO role has evolved to become
more strategy orientated but a counter
view was also offered, with some
4 A focus on finance leadership
participants suggesting that finance
leaders were not always best placed
to move into the CEO role; individual
attributes and preferences and industry
differences were also cited as relevant
considerations. A linked discussion was
also held around CFO incumbents. The
multi-faceted aspects of today’s CFO
role calls into play a need for a highly
skilled support team, particularly as
the CFO cannot be a specialist in every
financial discipline. However as the
direct reports into the CFO are becoming
increasingly specialised, there is a
potential development gap in bringing a
replacement from the finance function
through to the much broader CFO role.
Developing talent across geographical,
language and cultural differences was
also identified as presenting specific
challenges in today’s global finance
function.
Some key words of advice from the
roundtables:
Don’t be afraid of uncharted territory.
Breadth of exposure matters in today’s
finance leaders. Having a deep and
broad understanding of the business
helps, and sometimes that entails taking
roles outside of the finance function as
part of one’s career development.
Engineer your career portfolio carefully.
Think of exposures. Think of diverse
experiences. International experience
on the CV typically pays dividends in
today’s global finance function.
Be prepared to ask difficult questions;
challenge the status quo. Look to
drive innovation and question why
things are done in a particular way.
Be attuned to the dynamics within the
senior management team; ask the right
questions; be the ‘voice of reason’. In
particular, the CFO relationship with
the CEO should be close and mutually
respectful, not subservient.
The drive for transformation
World class finance functions drive The consensus from the discussions buy in and sponsorship from business
efficiency and effectiveness in their ACCA has recently undertaken is that leaders, being clear and articulating the
operations in today’s economy. Whilst finance transformation is a difficult role of the retained finance organisation,
the achievement of these goals exercise to execute effectively, and there and critically constant communication
collectively represents the outcomes is no particular “journey end”. There are to ensure transformation initiatives are
sought from these initiatives, there are however a number of common critical aligned to the changing needs of the
many different catalysts behind CFOs success factors – having a clear vision business.
seeking to transform their finance focused on business outcomes, ensuring
operations. Sometimes the driver behind
transforming the finance function doesn’t
start with the function; sometimes
the catalyst is business, rather than “We need to think about talent
finance transformation. To this end,
transformation of the finance function development. In the Asia-Pacific region,
seeks to better support the organisation, we are still growing in terms of capability.
to future-proof it and provide scale to
support a changed business footprint and The maturity of the financial-control
model. There are of course many other function is not yet up to global standards.”
drivers too; cost reduction driven by a
compelling labour arbitrage, the drive Norman Sze, Managing Partner, Consulting, Deloitte China
to process standardisation, improved
controls better data visibility and data
consistency, more effective compliance
and so on.
“If everybody has the skills and the
A significant part of the transformation
equation is talent, and increasingly ambition to become a CFO, you only
improved finance capability is an create frustration. There is only one CFO
outcome sought from the transformation
process. As the adoption of shared in a company. So it’s fine if people are
services and outsourcing continues to happy, perform, and want to remain within
evolve, one of the prevailing questions is
the implication on the talent pipeline for their function.”
global finance functions. Recent research
by ACCA1 suggests that significant “Successful business transformation
challenges remain, particularly in relation requires a vision, and a clear path towards
to mobility and the challenge of career
paths extending between shared service
realisation. That means it must be
operations and the rest of the finance quantified, tracked and communicated.”
function. This in itself raises the spectre
of dual career paths in the finance Holger Lindner, Member of Advisory Council,
function; one through shared services Singapore CFO Institute; Former Chief Financial Officer,
and other forms of delivery centres, and Daimler South East Asia Pte Ltd; Chief Financial Officer since
the other through business partnering February 2013 of TÜV SÜD Product Service
roles in the retained finance function,
or highly specialised finance roles such
as tax or treasury in finance centres of
excellence. It probably has significant
implications for the future career paths of
CFOs too.
1
Talent Management in a Shared Services World, ACCA 2012
5
The growing interest in analytics
One of the emerging features on the
finance leaders’ radar is analytical
insight. With increasing pressure on
the finance function to provide insight
to support decision making, one of the
drivers often cited by organisations for
the finance transformation journey is
the freeing up of the retained finance
function away from process delivery to
better support business units in financial
analysis and support, whilst migrating
more mainstream finance activity. With
the challenges of big data, increasingly
the finance function may be seen as the
natural function to drive further insight
by correlating, regressing, extrapolating
and joining the data dots to make
informed business decisions.
As corporate interest grows in the
analytics space, it’s also a significant
area in which the reputation of the
finance function can be enhanced, and
savvy CFOs recognise its potential. The
critical question of where analytics “sits”
however is perhaps a little redundant.
Essentially astute CFOs will look to
work with their counterparts in IT or
Operations to jointly drive the analytics
agenda within the organisation. Because
of the complexities of data analytics
and its outcomes, the management
team, including the CEO and even the
board perhaps needs to be involved in
adoption. Moving the entire organisation
to an analytics-based model means
a cultural change that must gain buy
in from the top; this is about gradual
modulation rather than quick fix.
“At IBM, the charter of the Finance Leadership Advocacy Group is to
guide the finance function along the transformation process to include
not only business analytics adoption but also the steps before that, to
establish the foundational basics of clean and consistent data upon
which a culture of advanced business analytics can be built.”
Scott Goodwin, CFO, Software Group, Growth Markets Unit, IBM
6 A focus on finance leadership
Risk and reward
In today’s difficult global economic
Case Study from IBM climate, businesses face a multitude
Before setting out to become analytics-driven, it is important for an enterprise to of risks which is why there is
“Earlier, the accountant was seen as a ‘no’
understand its starting point. Is it a Novice, Builder, Leader or Master in the four- growing recognition that effective man. But it is easy to say ‘no’ to risk; it is
step journey? Most likely the organisation is a Builder that has a view of current
results and a little of what’s driving those results, which are shared with other
risk management is a necessity for harder is to say, ‘Yes, there is risk, but how
sustainable business growth. Indeed,
teams in the department. Builders form 75% of IBM clients and other companies the financial crisis itself prompted do we manage the risk’.”
that have used Analytics Quotient or AQ, an IBM self-assessment technique that a change in the perception of risk
serves as a roadmap for deploying analytics. Another 15% of these enterprises management. There is now a heightened James Lee, Director of Finance, Regent Hotel Singapore;
would be Leaders, which look forward as much as review the past. But only recognition that people’s behaviour Council Member, ACCA
5% would be Masters, which allocate resources, minimise risk and maximise is also a key component of good risk
outcome with equal ease and speed. At this end of the spectrum, enterprises management and a strong ethical
have automated, instant, accurate, seamless converged data governance in place. culture starts at the top—with the
management and the board. Setting the
tone for the right culture is critical to risk
management.
“The CFO’s role in risk management


can be compared to that of a catalyst in
Risk must be viewed not in isolation
   
but in the context of the corporate
the cultivation of the right risk-intelligent
   
   

system, and more importantly, in terms environment and control-minded


   

of reward. Instead of looking at risk, atmosphere within the organisation. But
   governance and performance as separate





 

 silos, the three should be integrated. whether the CFO should be the only
 


 


 Besides monitoring risks related to owner of that risk-management strategy is
controls or business objectives, risk



 managers must also assess the gains another matter. The ownership should lie

 

from taking considered risks. This with everybody in the organisation.”
is especially relevant today because
an organisation has several risk- Paul Mok, Group Financial Controller, Orient Overseas
management tools available to help it (International) Ltd
with strategic planning. When expanding
  


 into a new segment, these tools not only





 define the risks and how they will impact


 the organisation, but also calculate the
 
potential rewards. “The global economic crisis has changed
Essentially, taking an integrated the attitude and perception of risk in
The transformation journey can be long and arduous. For example, IBM started approach to risk means embedding multiple ways, quite dramatically. We have
out in the mid-1990s with a low value-added, uncompetitive finance function. risk management into an organisation’s
The initial step was to attain a single general ledger and a single chart of operations, strategic planning and
developed new skills within our company
accounts. After laying that foundation in the early 2000s, the move was to decision-making, although the tactics to deal with risk and how to make it more
become a globally integrated enterprise with common financial applications. That may differ according to sector and
meant setting up centres of excellence in cities worldwide, choosing locations industry. Because of the nature of
transparent. This has been maintained
based on available skills, languages spoken and customer-facing businesses. The their work, finance professionals play and has become an integral part of our
next step was a greater use of analytics, harnessing the company’s powerful sets
of data to garner intelligence for predictive analysis, and integration of financial
an important role in integrated risk management discussions.“
management and helping organisations
and non-financial data. to make better, less-risky decisions.
Marco Swoboda, Vice President & CFO Asia Pacific, Henkel
But where does the responsibility for
driving a sound ethical culture across
the organisation lie? The consensus
was that, whilst different organisations
notionally appoint different individuals
with responsibility for risk management
in the organisation (for example, Chief
Financial Officers, Chief Risk Officers),
creating a risk-aware culture can only
work if the entire management team
embraces it, and ultimately it should be
the CEO who is setting the tone from the
top. There is a role for the CFO to act
as a catalyst for a risk-aware culture but
essentially the CEO must be the driver.
7
 Corporate governance
Broadly speaking, corporate governance
is the system by which a company
operates and is managed, keeping
in mind the interests of the different
stakeholders. It is the system that
enables a company to become a
good corporate citizen, beyond mere
compliance to regulations. Corporate
governance is about value creation for
shareholders, and preventing mistakes
that could result in value destruction.
In a large organisation, and indeed
in the community, different people
practise corporate governance but do
Key points on risk not necessarily call it the same thing.
Nonetheless, it is important that both
practitioners and non-practitioners of
• In a global business environment, businesses face a multitude of risks. corporate governance use the same
terminology so that they are in tune
• There is a growing awareness of risk, and an acknowledgement of how with one another. Before the Enron
difficult it is to manage risk in practice. scandal, there was a greater belief that
basic vigilance structures worked, and
• One lesson from the global crisis is that those organisations thought to governance seemed to be more of a
have had great risk-management processes in place were actually quite routine exercise. Today, independent
vulnerable. directors, audit committees and investors
are clearly doing more work to genuinely
• Ethics is a key component of good risk management. understand what is happening within a
company.
• Setting the tone for the right culture is critical to an effective risk-
management strategy. Independent directors in particular play
a vital role in monitoring and overseeing
• Risk must be considered in the context of the reward that may accrue corporate practices, and are considered
from taking risks; it cannot be considered in isolation. by some stakeholders to be the
“policeman” watching over a company’s
• Finance professionals have a key role to play in risk management. operations. As such, evidence of flagrant
corporate wrongdoing often brings into
• Boards should have assurance maps on how risk is being managed, and question the level of vigilance by the
accountants are a critical part of that assurance process. independent directors. Yet sometimes
the latter’s supervision is hampered
because a company does not provide
them full information, either intentionally
or because it is unavailable. This creates
an unviable situation for an independent
director, who may decide to relinquish
the position.
A focus on finance leadership
When a company is called out for bad Given the importance of building
governance, however, the response investor confidence and trust, should
should not be censure, but engagement, corporate governance assessment be
of the “policeman”. Rather than play the made part of the audit process? While
blame game, investors should fix the companies unable to meet minimum
problems within an errant company to standards would be sifted out, there
avert a further fall in its value or even is a danger that such an accreditation
a delisting. One way is to involve the would degenerate into a mere box-
independent directors in adding reliable ticking exercise. Moreover, auditors
processes, building integrity within the may not be the best suited to assess
company and communicating effective corporate governance. It is far better
changes to the market. for shareholders themselves to assess
a company’s corporate governance
For their part, independent directors practices, through available information
may need to go the extra mile to truly and engagement with management.
understand a company’s practices. There is a role, too, for regulators to ask
For example, prior to their stipulated companies for pertinent information,
consultations with auditors, the and for stock exchanges to conduct
independent directors could attend the research on companies that goes beyond
closing meeting between auditors and superficial surveys and checklists.
management to identify key issues. They
could also discuss everyday issues with
the financial controller or accounting
manager, who is one level below the
CFO and usually more involved in routine
operations.
Engagement is a key word. By sharing
knowledge and opinions, investors can
make a difference in the companies they
finance. In one example, interacting
with a CFO helped to persuade a
company to reduce the size of its
capital issue. Private engagement is
probably more effective than public
engagement because using the media
can be a double-edged sword. While
media backing can be helpful, the
communication process can be harmed
if a private discussion is splashed in the
news, perhaps even taken out of context.
9
Corporate governance A look to the future
The global economy is in a state of
volatility and uncertainty – with little
“From an asset manager’s perspective, corporate governance is about prospect of a return to calm any time
economic value for our clients, and we see that manifesting itself in the soon. Society is undergoing rapid
quality of the management teams of the companies in which we invest.” and fundamental adjustments, while
environmental changes continue to
put pressure on business systems. At
Clarence Yang, Head of Corporate Governance Asia ex-Japan, BlackRock
the same time, the global accountancy
profession is undergoing change, driven
both by the wider pressures of the
business world – not least the continuing
impact of the financial crisis – and
internal demands.
In order to make sense of the continuing
“One issue we struggle with in Asia is whether public shareholder turmoil, it is vital that accountancy
activism, which focuses on a single company, and gets the media and professionals are armed with the tools
they need to navigate a constantly
investors involved, makes a difference to corporate governance in changing landscape. Crucial to this
either that company or that market. In many cases it hasn’t made much is an understanding of the drivers for
difference. But public activism is necessary and complements the quiet change that are having an impact on the
profession. From these, it is possible to
engagement undertaken by mainstream institutions. The onus should identify the challenges and opportunities
be on public activists, if they want to improve corporate governance facing business, society and the
profession.
standards, to think through how their activism will achieve longer term,
systemic improvements in a market—not just a one-off gain.” Complexity, in both business and
regulation, is growing at the same time
Jamie Allen, Secretary General, Asian Corporate Governance Association, Hong Kong as global competition is intensifying
and business cycles shortening. Rapid
advances in technology are driving
disruptive innovation, overhauling
industry structures, challenging and
reinventing business models and
“A corporate governance accreditation or audit means you then have spawning whole new sectors, take
Zongheng as an example of the booming
a checklist, and people will do only what is on the checklist. If you set a web publishing industry in China.
minimum requirement, most people will try to do just the minimum.”
In addition to all this, accountants –
Kevin Lau, Director, Hin Yan Consultants whatever sector they work in – face
specific pressures.
10 A focus on finance leadership
The accountancy profession is under
pressure to improve its public image and
go beyond current financial reporting
practices to provide a more transparent,
simplified but holistic picture of a
business’s health and prospects. There
is also a drive to globalise accounting
standards and practices. The growth
of regulation is adding to the burden of
compliance and threatening to drive up
costs.
There is a new opportunity to transform
both the operational and interpretative
elements of accountancy by using
intelligent systems, data mining and
predictive analytics to exploit the stores
of ‘big data’ that organisations are
amassing. And there are increasing
expectations that the CFO and
accountancy function should play a far
greater role in business in everything
from strategic decision-making to the
design of new revenue models.
These changes are exciting, challenging
– and often alarming too. In an effort to
help the profession make sense of what
is going on, and consider how to prepare
for the challenges ahead, ACCA’s 100
Drivers of change report draws on the
insights of the members of the academy,
as well as the views of members of the
Institute of Management Accountants
(IMA) and ACCA’s other global forums
and experts. The report identifies the
10 ‘must dos’ for businesses and the
profession to effectively weather volatility
and shocks while reaping the benefits of
existing opportunities.
The five imperatives for accountants
are…
Accounting professionals will need to
embrace an enlarged strategic and
commercial role. As businesses adapt to
a turbulent environment, opportunities
are emerging for accountants to assume
a far greater organisational remit
across all aspects of corporate decision
making, from strategy formulation
through to defining new business
models. The profession will also need to
focus on a holistic view of complexity,
risk and performance and establish
trust and ethical leadership. There
is growing consensus on the need for
reporting to provide a firm-wide view of
organisational health, performance and
prospects. Such a holistic perspective
must acknowledge the complexity
of modern business and encompass
financial and non-financial indicators of a
firm’s status and potential.
The fourth strategic action is to develop
a global orientation. The pace of global
expansion of firms from developed and
developing markets alike is placing
the spotlight on accountancy’s ability
to master the technical language and
cultural challenges of cross-border
operations. The final strategic action
for the profession is to reinvent the
talent pool. The diverse range of
demands on the profession is forcing a
rethink of everything from recruitment
through to training and development.
Entrepreneurial spirit, curiosity, creativity
and strategic thinking skills could
assume far more significance in the
selection of tomorrow’s accountants.
11
A look to the future Conclusion

The Accountancy Profession in Ten Years In today’s globalised business environment the role of the CFO is evolving.
So how will it all end up a decade from now? These challenges lead us to four possible scenarios for the future role of accountants
that combine levels of integrity with width of remit. Combining high levels of perceived integrity with a broad organisational remit Finance leaders continue to support their businesses in charting paths to
going beyond basic compliance work would position accountants as ‘changemakers’ – those who, by 2022, have succeeded in growth, and managing their external market obligations, but in an increasingly
balancing public expectations for responsible financial management with an enlarged and more entrepreneurial stance within the
business. It is possible to see these changes already emerging as the CFO’s role evolves. complex, risky and pressurised business landscape, their traditional controllership
responsibilities remain important too. This is an age where balanced finance
Combining these high levels of perceived integrity with a more narrow focus on compliance positions accountants as ‘safehands’ –
those who have succeeded in re-establishing public faith through deliberately focusing on the technical elements of their roles. leadership becomes very important.
Where low perceived integrity is combined with a narrow focus, accountants will function merely as ‘survivors’. Those who pursue
a broad remit, but with low integrity perceptions can be classed as ‘buccaneers’ – an unstable scenario as the drive for profit will
be seen to come at the expense of sound financial stewardship. There are numerous challenges in executing finance understanding to business strategies is a clear example of
leadership effectively. CFO’s have sought to transform their where finance can apply the finance lens to drive superior
finance operations to drive the efficiency and effectiveness decision making, and we can expect a step change in
of finance operations, but success in the transformation insight through analytics. Effective risk management of the
journey is typically difficult to achieve; change management, organisation also provides opportunities, as finance leaders
the development of new skills and capabilities across the seek to balance appropriate risk management approaches
finance function, articulating the vision and ensuring on- with the pursuit of sustainable rewards, but the broader risk
going leadership buy in remain key challenges. The business and ethical framework of the business must have buy in from
continues to change too which presents a whole host of the top of the organisation for success to be realised. A more
challenges in itself. integrated approach to risk, governance and performance is
needed too, and for professional accountants this presents the
There are however opportunities for finance leaders that opportunity for a new mandate in ensuring their organisations
must be embraced moving forward. More than ever before, balance risks taken for the rewards received; in this sense,
the finance function and finance leaders are best placed to finance leaders have a significant role to play in driving the
drive future business success. With ongoing developments sustainable success of organisations in the future.
in technology, the opportunity to drive financial insight and

The best scenario? Faced with an ever growing operational and regulatory compliance workload, an understandable choice would
be to opt for the Safehands scenario and focus on a purely technical and more traditional definition of the accountant’s role. The
Safehands emphasis on integrity would meet with strong public approval.

But there is also a clear opportunity for the profession to aspire to the Changemaker scenario and embrace an increasingly strategic
opportunity. This would mean meeting the public’s need for the highest standards of integrity while taking on a broader leadership
role within both business and the wider economy. The role of Changemaker is perhaps the most exciting and rewarding option both
for those within the profession as well as would be recruits.

12 A focus on finance leadership 13

 About ACCA
ACCA (the Association of Chartered Certified Accountants)
is the global body for professional accountants. We aim to
offer business-relevant, first-choice qualifications to people of
application, ability and ambition around the world who seek a
rewarding career in accountancy, finance and management.

Founded in 1904, ACCA has consistently held unique core

values: opportunity, diversity, innovation, integrity and
accountability. We believe that accountants bring value to
economies in all stages of development. We aim to develop
capacity in the profession and encourage the adoption of
consistent global standards. Our values are aligned to the
needs of employers in all sectors and we ensure that, through
our qualifications, we prepare accountants for business. We
work to open up the profession to people of all backgrounds
and remove artificial barriers to entry, ensuring that our
qualifications and their delivery meet the diverse needs of
trainee professionals and their employers.

We support our 154,000 members and 432,000 students in

170 countries, helping them to develop successful careers in
accounting and business, with the skills needed by employers.
We work through a network of over 80 offices and centres and
more than 8,500 Approved Employers worldwide, who provide
high standards of employee learning and development.

14
The information contained in this publication is provided for general purposes only. While every effort has been made to ensure that the information is accurate and up to
date at the time of going to press, ACCA accepts no responsibility for any loss which may arise from information contained in this publication. No part of this publication
may be reproduced, in any format, without prior written permission of ACCA. © ACCA February 2013

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